The investor cannot avoid addressing the life cycle issue of his properties. Life cycle management covers the following areas:
- Life cycle phases
- Idea – planning – building preparation
- Commercialisation
- Use / operation – vacancy rate – maintenance (reconditioning, repair, renovation)
- Change / adaptation / conversion / extension or replacement newbuild
- Life cycle costs (Life Cycle Costs [LCC] / Whole Life Costs [WLC])
- = Indicator to establish the long-term efficiency of property investment costs
- Indicators used for
- purchase decisions
- maintenance and renovation
- combining initial and subsequent costs
- Calculation of life cycle costs
- There are no rules for calculating life cycle costs
- Inclusion of outlay to eliminate the maintenance backlog (also refurbishment backlog) and renovation > construction costs affect future cash flows
- Reduction of gross rent
- Reduction of net value
- Reduction of impact on future cash flows
- Ratio of probable holding period to property investment for eliminating the maintenance backlog and renovation
